Data privacy and security are of paramount importance in the digital world today when organizations are witnessing increased cybercrime, emerging threats, and advanced persistent threats or APTs. SOC 2 compliance can help Cloud Service providers, Managed Service providers, SaaS providers build customer trust in the organization’s capabilities to protect their personal and sensitive information in an ever-changing and complex regulatory world
With technology improving by leaps and bounds, organizations are increasingly moving to and expanding in the cloud. Malicious actors are simultaneously intensifying their efforts to infiltrate into network systems and try to compromise data of enterprise information assets. Cyber adversaries have repeatedly unleashed various information security threats in the form of NotPetya, Spectre, Cloudbleed, and WannaCry viruses. The intensive proliferation of such cyber threats makes it challenging for IT security teams to prevent and contain the attacks. At the same time, businesses have struggled to ensure adequate compliance with organizational policies and processes, security best practices, and regulatory guidelines. Hence, it has become imperative for service providers having customer data to adhere to SOC 2 compliance norms. The following intends to demystify SOC2 and examine how organizations can build trust with SOC2 compliance.
What Is SOC2 Report and Its Significance For Service Providers?
Developed by the American Institute of Certified Public Accountants (AICPA), SOC2 is a technical certification designed for all service providers who handle and store customer data. SOC2 stipulates that organizations establish and follow stringent information security procedures and policies to ensure the security encompassing confidentiality, integrity, and availability and smooth handling of their customers’ data. A SOC2 report is essential as organizations extensively use the cloud for storing customer information. This report is significant for business entities because it guarantees that the organization’s security measures comply with today’s cloud requirements as well.
Understanding The Difference Between SOC2′ Type 1′ And ‘Type 2’ Reports
Before the introduction of SOC 2 in 2014, all business organizations only had to comply with SOC 1 requirements. SOC1 was primarily focused on Internal Control over Financial Reporting (ICFR) for service organizations. SOC 2, on the other hand, is a report on controls at a service organization level that are relevant to security, privacy, confidentiality, integrity, and availability of information. Today, every organization using cloud services must necessarily be SOC 2 compliant to minimize the risk and exposure of confidential customer information. There are SOC 2 Type 1 and Type 2 reports as defined below.
- SOC 2 Type 1 report is a static report as it details the systems and controls in place for security compliance on a specific date. Auditors verify and certify whether the organization meets the relevant trust principles.
- SOC 2 Type 2 report is a continuing compliance report that assesses how effectively business organizations provide and manage the desired data security levels over an extended period.
Why More And More Organizations are Getting SOC 2 Certified?
With strict data privacy standards such as General Data Protection Regulation (GDPR), California Consumer Privacy Act (CCPA) implemented, enterprises and large businesses emphasize the absolute need for the service providers who handle customer data to become SOC 2 compliant. Below are the prime reasons why organizations increasingly go for SOC 2 compliance.
- Achieving SOC 2 compliance ensures that the business has an established security system to monitor unusual activity and authorized/unauthorized system configuration changes and control proper user access levels.
- With malicious actors getting smarter by the day, it has become imperative for business entities to stay a couple of steps ahead. SOC 2 compliance assures organizations that they are ready to monitor unknown malicious activity as and when they surface.
- SOC2 certification has sufficient alerting procedures to prevent unauthorized access to customer data accounts. These alerts keep the IT security teams on their toes and enable them to take immediate action to prevent data compromise.
- SOC2 compliance provides detailed audit trails and insights into the security incidents related to an organization’s data, allowing them to make informed decisions and respond quickly.
- Besides, SOC2 certification provides the necessary assurance to customers that the business values their data and can take corrective action before an incident resulting in data compromise.
Why Service Providers can lose new Customers if they are not SOC2 Certified?
The five specific criteria for managing customer data, as developed by AICPA, are security, availability, processing integrity, confidentiality, and privacy. A SOC 2 certified business assures customers that it has the proper security measures to prevent any data breach.
A SOC 2 certification allows the business entities to implement access controls for preventing malicious attacks and data breaches, misuse of business software, disclosure of confidential official information, and unsanctioned alterations.
SOC 2 compliance covers every aspect of cybersecurity, thereby enabling organizations to attract business, especially if they are in a specific industry where customer data privacy and confidentiality are of paramount importance.
This certification assures customers that the business firmly commits to minimizing risk, thereby instilling trust. Gaining the customer’s trust is significant to the business’ success.
Why Customers Trust Organizations With SOC 2 Compliance?
Organizations complying with SOC 2 requirements gain customer’s trust because they satisfy the necessary security criteria for managing customer data. However, apart from security, it also helps organizations in achieving the following:
- Availability – SOC 2 compliance measures the current usage by establishing a baseline for capacity management using which it becomes possible to evaluate the risk of impaired availability because of capacity constraints. It also assesses environmental threats that can impact system availability.
- Processing Integrity – This factor guarantees delivering the required data in its right form. SOC 2 compliance ensures accurate records of system inputs and defines processing activities to ensure that they meet the required specifications.
- Confidentiality – By restricting access to authorized persons to view and disclose confidential data, the SOC 2 compliance requirement aims to gain the customer’s trust. The requirements include implementing procedures for identifying critical information and determining how long to hold it. It also details the implementation procedures to erase the data after the business identifies it for destruction.
- Privacy – This SOC 2 requirement focuses on the business’ adherence to the client’s privacy policies and GAPP from AICPA. It confirms the reliability of third-party data sources and ensures that the data collection methods are fair and legal.
While SOC2 Type 1 requires businesses to pass audit tests, SOC 2 Type 2 necessitates long-term, ongoing internal practices to ensure that customer information in the cloud remains secure. A SOC 2 report confirms that the business has well-defined security policies and procedures in place. By securing the cloud infrastructure operations, SOC 2 compliance helps build trust with customers and end-users by assuring them that their data will be safe from cyberattacks.